Technical outlook:
The US dollar index rallied through fresh swing highs around 100.97 on Friday, just six points higher than the previous high. It has now tested the Fibonacci 0.786 retracement of the previous downswing between 104.00 and 89.20 levels. The direction remains unchanged for now as bears remain poised to be ack in control.
The US dollar index has yet again print fresh highs accompanied by a bearish divergence on the RSI (not seen here). Furthermore, its counterpart EURUSD has refined from printing fresh swing lows. This phenomenon is also divergence and indicates potential trend reversal ahead. If correct, prices will break below 99.70 in a flash.
The US dollar index is pulling back a bit and is seen to be trading around 100.85 levels at this point in writing. The index remains vulnerable for a bearish turn from current levels and a break below 97.60-70 will confirm a top is in place. Traders might be preparing to initiate fresh short positions around current levels.
Trading plan:
Potential drop below 97.60 against 101.50
Good luck!
